|2008 Kia Rio|
With oil hitting $147 a barrel last week and gas prices averaging $4.10 nationwide, all of a sudden cheap, small, simple cars are much more appealing.
It's something General Motors has noticed, as evidenced by the company's announcement this week of major cuts to its truck division as part of a multibillion-dollar restructuring. Similarly, Toyota is halting truck production for three months at its U.S. plants.
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While the backbone of the cheap-car market has been, traditionally, first-time car buyers, current gas prices are boosting the market for cars $15,000 and under by 17%, according to auto analysts. From the commuter to the family to the cash-strapped and every type of driver in between, small cars are increasingly popular.
While the low prices do reflect a lack of luxury when compared to sedans or SUVs, there's no shortage of options when it comes to cheap cars. Enough, in fact, for buyers to be picky, and wind up with a quality ride with enough bells and whistles to suit their individual needs.
"There is nothing bare-bones about the Fit," says Ed Kim, director of industry analysis at AutoPacific Inc., an automotive marketing and product-consulting company, referring to Honda's $13,950 car, ranked at No. 11 on our list. The Fit is a small car, built with the same production quality as the higher-end $21,160 Honda Accord. It comes standard with an adjustable steering column and four-speaker audio system with speed-sensitive volume control that automatically becomes louder when driving at faster speeds and softer at lower speeds. The car gets 30 mpg for the automatic transmission, and is equipped with multiple airbags in the front, rear and side.
Other vehicles among the cheapest cars available are the Chevrolet Aveo, ranked No. 2 at $11,460; the Toyota Yaris, third at $11,550; and the Kia Spectra, fifth at $12,895.
Varied as the options may be right now, however, that might not be the case in the future. Low-priced cars are often competing with higher-end, inexpensive used cars, the result of automakers building vehicles that are more durable, reliable and longer-lasting, says Alexander Edwards, automotive division president of the market research firm Strategic Vision.
Just the Basics
|2008 Toyota Yaris|
If price is your only concern, and you want the absolute cheapest new car available in America, it's the Korean-made Kia Rio, which starts at $10,890. At that price you get a five-speed manual transmission with a 1.6-liter, four-cylinder engine that gets an EPA-estimated 29 mpg. What you don't get, however, is an air conditioner, audio system, power window or power door locks. But you do get a complete airbag system that includes front-seat mounted side airbags and side curtain airbags. To get the aforementioned basic amenities and an automatic transmission, buyers would instead have to go with the Rio LX, which starts at $12,815.
The newest addition to the cheap car market is the Smart Fortwo, a two-seater powered by a 1.0-liter, three-cylinder engine. It produces 71 horsepower and gets an EPA-estimated 36 mpg. Popular in Europe for several years now, the Smart made its debut last year in the U.S. as a 2008 model-year vehicle and ranks fourth on our list. There are only three versions available; the base model Pure is priced at $11,590 with a manual transmission. It is the only vehicle on our list that offers power locks and electronic stability control as standard, which helps drivers better maintain control in adverse situations.
If these cars seem a little too basic, keep in mind that it's impossible to buy a new car for less than about $11,000, says Edwards. About 10 years ago, there were some vehicles available at, or below, that price--like the Geo Metro, which GM discontinued in 1997. Blame the price hikes on inflation and general improvements, such as nicer interiors and added standard safety features. That combination caused the price of cheap cars to increase 20% to 30% since the 1990s, says Edwards.
All of the vehicles on the list have standard or optional side-impact and side curtain airbags, but you may have to purchase a higher-priced version if you want additional safety features. However, all of the safety equipment does little to help save lives in the event of a crash involving a small car and bigger vehicle.
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On the bright side, though, today's small cars are safer than ever before, according to the Insurance Institute for Highway Safety. The Toyota Yaris, Smart Fortwo Pure, Honda Fit and Nissan Versa all earned the IIHS "good" rating in front- and side-impact crash tests, making them among the safest cars on the list. The Versa and the Mitsubishi Lancer (the latter earned good for front testing but has not been tested for side impact) were the only vehicles on the list to earn good in rear-impact testing. The Versa is the safest car on the list, having earned triple good ratings in all three areas.
Auto analysts expect automakers to continue making improvements--safety and otherwise--as a new generation of demanding buyers comes of age. (Americans aged 14-30, many of whom have yet to take driver's training, number 76 million, about the same size as the Baby Boomer generation.) But improvements to these cars to suit those buyers will come at a cost: While cheap cars will get better, their prices will creep up the more they're packed with appealing features.
"Generation Y buyers have grown up with technology, conveniences and luxury," says Kim. "They don't want to earn things; they want them now, and they expect them now. Automakers are scrambling to get high-end features into small vehicles."
Top Five Cheapest Cars
1. 2008 Kia Rio
Base MSRP: $10,890
Combined EPA MPG: 29 manual
2. 2009 Chevrolet Aveo
Base MSRP: $11,460
Combined EPA MPG: 28 automatic
3. 2008 Toyota Yaris
Base MSRP: $11,550
Combined EPA MPG: 32 manual/31 automatic
4. 2008 Smart Fortwo Pure
Base MSRP: $11,590
Combined EPA MPG: 36 manual
5. Kia Spectra
Base MSRP: $12,895
Combined EPA MPG: 26 manual/27 automatic